Markets are likely to turn volatile in the near term given the rising volatility index, analysts said.

V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said the rising VIX is indicative of potential volatility. The market can turn highly volatile in the short run.

In the two days of trading in May, FPIs invested Rs 1156 crore in equity and sold Rs 1726 crore in debt.

He said the Fed’s decision indicates rate cuts much lower than expected earlier this year. Inflation has turned stubborn at lower levels but the latest jobs data in the US indicates a slowing economy and, therefore, rate cuts may be necessitated.

“The wage increase falling below 4 per cent also reflects a weakening labour market. From the stock market’s perspective, this is good news which is why the US markets rallied sharply on Friday,” he added.

“More than anything else, FPIs will respond to changes in the US bond yields. If the US bond yields fall and the Indian economy and markets do well, they will turn aggressive buyers,” he added.

Nagaraj Shetti, Senior Technical Research Analyst, HDFC Securities, said the short-term trend of Nifty seems to have reversed. The higher top of the bullish pattern is likely to have completed on Friday at the swing high of 22794 levels and the short-term downward correction is expected in the coming sessions. Immediate resistance is at 22600 and the next downside levels to be watched are around 22120 levels.